David is comprehensively registered broker’s sales assistant job description experienced in many facets of financial and legal research and publishing. As an Investopedia fact checker since 2020, he has validated over 1,100 articles on a wide range of financial and investment topics. While consumers may be familiar with these tech names, they may not be aware of the huge returns generated by these six companies for the 11-year period from the start of 2012 to the end of 2022.
- Investors must consider these factors while employing short-term or long-term investment strategies and conducting thorough fundamental analyses of each FAANG company.
- Finder compares a wide range of products, providers and services but we don’t provide information on all available products, providers or services.
- For investors, it’s almost impossible to ignore FAANG stocks that have been ruling the market for over a decade.
- Replacing Netflix with Microsoft bumps those percentages up to about 26% and 50%, respectively.
- Perhaps most telling of their stature, is the market value they share and the market capitalization they’ve collectively accumulated.
Risk Assessment and Diversification
However, critics argue that, even with impressive business performance, the FAANG stocks’ prices have become so expensive that it may be difficult to realize attractive long-term profits from investing in them. Ultimately, this “debate” between investors is best captured by the buying and selling patterns in the FAANG stocks themselves. In 2022, Alphabet holds a dominant share of the online advertising market, but the growth segments that attracted investors for so many years have started to slow. In the third quarter, Alphabet reported just 6% total revenue growth, down from 41% a year ago. YouTube ad revenue, which was up 43% a year ago, was down 3% in the quarter.
FANG Stock Performance
Microsoft is what does an it security specialist do not a FAANG stock, which is why there is no “M” in the acronym. FAANG stocks were meant to describe hot, new high-growth tech companies of the 2010s. Your best bet among exchange-traded investments is the MicroSectors FANG+ ETN, which counts FAANG stocks as about half its total portfolio.
What is your risk tolerance?
Leon isn’t alone in his belief that Netflix has a difficult journey ahead. The average price target among the 43 analysts covering NFLX stock is $305, suggesting just 4.3% upside. Since Cramer’s original FANG list in 2013, Netflix what is covered call options strategy has expanded its business internationally and invested heavily in original content.
Tech-focused ETFs are also likely to include some if not all of FAANG stocks and offer similar exposure. These corporations — all American-based, but with a global presence — are not only household names, they’re financial behemoths. Their combined market capitalization is nearly $10 trillion, and they account for roughly 20% of the market cap of the S&P 500 (an index of 500 of the largest public companies in the U.S.). So they represent not only one of the most significant industries in the U.S., but a sizable chunk of the U.S. stock market itself. FAANG actually began as FANG around 2013, as Apple didn’t join the ranks until 2017. The origin of the acronym has often been attributed to Jim Cramer, the financial TV host and co-founder of The Street.com.
Apple’s main strength is its ubiquitous iPhone which makes up the major portion of its sales. Apple made about $366 billion in total revenue in the financial year that ended on Sept. 30, 2021, with iPhones making up about 33% of the total sales. That revenue mix, however, is changing fast as the biggest FAANG stock by market cap tries to sell more of its services which offer higher margins.
While Netflix’s market cap is now only $272 billion, software and cloud services giant Microsoft (MSFT) has grown to a more than $1 trillion valuation. An alternatives to FAANG stocks is the Magnificent 7, a group of tech stocks that includes FAANG stocks except Netflix, while adding Microsoft, Nvidia, and Tesla. Some investors might prefer that grouping, while others might go broader, such as with an ETF that tracks many tech companies in addition to FAANG. Other stocks and funds in different sectors could also be worth considering. If you decide not to own individual shares of the companies, you can get exposure to them through a number of exchange-traded funds (ETFs) and mutual funds. Any index fund that tracks the S&P 500 Index or broader stock market most likely has holdings in FAANG stocks.